Is Green Mountain’s Stock Just Warming Up for a Bigger Run?

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With shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) trading around $119, is GMCR an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Green Mountain Coffee Roasters is engaged in the specialty coffee and coffee maker businesses. The company roasts Arabica bean coffees including single-origin, Fair Trade Certified, certified organic, flavored, limited edition, and blends offered in K-Cup portion packs, and whole bean and ground coffee selections. It also offers other specialty beverages, including tea, hot apple cider, and hot cocoa also offered in K-Cup portion packs. The coffee and relative drink trend has been exploding over recent years. Green Mountain Coffee Roasters makes this trend as personal as possible by bringing favorite beverages to the comfort of homes and businesses. As the specialty and related beverage trend operates in full force, look for companies like Green Mountain Coffee Roasters to see rising profits.

Green Mountain Coffee Roasters shares fell Wednesday after the company was downgraded over limited details on its forthcoming Keurig Cold beverage maker and a lawsuit over its K-cup business practices. The maker of Keurig coffee makers was downgraded to neutral from buy by Longbow, which cited the stock’s valuation, increased investment spending, and limited details on the Keurig Cold device being developed with Coca-Cola (NYSE:KO). The companies said last week that Keurig Cold will be available in Green Mountain’s fiscal 2015, but Longbow noted the wide potential time frame for the launch date as another reason for the downgrade.

Shares fell nearly 1.6 percent to 117.50 in the stock market today. Shares have been surging since Green Mountain announced its partnership with Coca-Cola and hit a new high on Tuesday. Other analysts still remain bullish on the company. On Tuesday, Williams Capital raised Green Mountain’s price target to $125 from $106 and kept its buy rating on the stock, saying the Coke deal could help turn Green Mountain into a global company by boosting its brand abroad.

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